Committee approves using HMO tax to pay for newborn screenings

Existing tax would replace declining tobacco fund revenues to pay for KDHE program

The House Appropriations Committee today approved a bill that would use an existing tax on health maintenance organizations to pay for the state’s newborn screening program.

The program tests infants for 29 metabolic and health disorders to help catch them early and prevent disability or death. In fiscal 2011, 40,697 infants were screened and 2,798 required follow up by staff at the Kansas Department of Health and Environment. The program cost $2.2 million in fiscal 2011 and has been paid for by settlement dollars from the nation’s major tobacco companies since 2009.

With the tobacco funds expected to decline in future years, Gov. Sam Brownback directed KDHE officials to find alternate funding for the program starting the fiscal year that begins July 1, 2013.

Under Senate Bill 436, HMO privilege taxes would pay for the screening program's costs — whatever they might be — and the remainder of the tax revenues would be deposited in the State General Fund. In fiscal 2011, $8.4 million was collected from the HMO tax, all of which went into SGF.

The Senate Ways and Means Committee removed a $3 million cap on the screening program that was originally in the bill. Last week, the full Senate approved the bill, 38-2.

Rep. Joe McLeland, a Wichita Republican and member of the House committee, asked whether all $8.4 million could potentially go toward the screening fund.

"If we had that many babies born," replied Rep. Marc Rhoades, the Newton Republican who chairs the committee.

KDHE Secretary Dr. Robert Moser testified in support of the bill. He said the program's projected cost for fiscal 2014 is $2.4 million.

Generally, the privilege tax equals about 1 percent of the health maintenance organization’s annual premium charges. The tax is collected by the Kansas Insurance Department.

Rhoades said assigning funds that formerly went into the state general fund was a "trade off."

"If we keep taking from these funds that normally just go into SGF then other things are going to potentially suffer," Rhoades said. "I think this is a good idea in many respects, but just keep that in mind."

Kansas is one of only three states that do not charge a newborn-screening fee as part of the hospital bill for a delivery. KDHE officials have said efforts to rally support for imposing a fee in Kansas had been unsuccessful.

The screenings involve taking a tiny amount of blood from a newborn’s heel. The sample is then sent to a KDHE laboratory.

The screenings are not mandatory but virtually all babies are screened, according to KDHE officials.